Bargain Hunters Take Note: Insider Cluster-Buying At DNR

A particularly strong insider buying signal is what we call a “cluster-buy” where three or more different insiders make open market purchases within a short period of one another. At Denbury Resources, Inc. (NYSE: DNR), 6 different insiders purchased 6,755 shares at an average price of $16.12/share, for a total of $108,891, with the most recent purchase on December 31, 2012.

Presumably the only reason an insider would take their hard-earned cash and use it to buy stock of their company in the open market, is that they expect to make money. So when multiple insiders all decide to make purchases around the same time, it could be a strong indication that the stock is undervalued. Below is a table summarizing the insider buys that make up this “cluster”:

Purchased

Insider

Title

Shares

Price/Share

Value

12/31/2012

Phil Rykhoek

Chief Executive Officer

1,694

$16.12

$27,307.28

12/31/2012

Alan Rhoades

VP & Chief Accounting Officer

726

$16.12

$11,703.12

12/31/2012

Kenneth Craig McPherson

SVP, COO

1,222

$16.12

$19,698.64

12/31/2012

Charles Gibson

SVP, Planning, Tech & BD

815

$16.12

$13,137.80

12/31/2012

Robert L. Cornelius

Sr. VP of CO2 Operations

1,149

$16.12

$18,521.88

12/31/2012

Mark C. Allen

Sr. VP/Chief Financial Officer

1,149

$16.12

$18,521.88

The chart below shows the one year performance of DNR shares, versus its 200 day moving average. Note that DNR’s low point in its 52 week range is $13.13 per share, with $21.37 as the 52 week high point — that compares with a last trade of $16.74, with shares currently trading up about 1.4% on the day.

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